Joe Hockey on welfare dependence

Surely Joe Hockey must soon become more careful about preaching to us about ending the age of entitlement and the need for Australians to be less reliant on welfare.

Facts are getting in his way. The latest reality check has been the release of the Melbourne Institute of Applied Economic and Social Research’s Household, Income and Labour Dynamics in Australia (HILDA) which surveys 17,000 people each year in Australia. The HILDA report found that Australians are becoming less dependent on welfare.

In 2001, 23% of Australians aged 18 to 64 received weekly welfare payments. It has now fallen to 18.6%.

The proportion of retired people who relied on welfare benefits as their main source of income has declined over the last decade from 68.5% to 65.8%.

In 2001, there were 7.1% of Australian households where more than 90% of income came from welfare. A decade later the figure has fallen to 4.8%.

Professor Roger Wilkins, the report’s author, said ‘The long-term trend away from welfare reliance was largely the result of the long boom, although a succession of welfare reforms, tightening eligibility, had also contributed.’ Professor Wilkins added ‘I’m absolutely bewildered by Hockey’s obsession on welfare reliance in Australia. It’s lower than it’s been in a couple of decades, possibly longer.’

I have pointed out in earlier blogs that Australian government expenditure by all levels of government as a percentage of our GDP is one of the lowest in the OECD.

The major problem is the erosion of our tax base by deductions, or as economists calls them, tax expenditures that favour the wealthy. The higher the marginal rate of tax, the greater the benefit of these deductions. These deductions include superannuation, negative gearing and the discount on capital gains.

The “debt and deficit” crisis has been wildly overplayed. Now the facts on welfare dependence are running in the opposite direction to what Joe Hockey is telling us.